Abstract

Gaining and sustaining the competitive advantage in today turbulent environment is an obsession of corporate managers. Manufacturing firms while investing in R & D, worry about the innovations driven by these researchers and their effect on the firm’s position in the market. In other words, the balance between innovation exploration and innovation exploitation (innovation ambidexterity) and its effect on firm’s competitive advantage is an important question of such firms. What is missed in many researches is the effect of strategic leadership on the relationship between innovation ambidexterity and competitive advantage that this research tries to fill this gap. This paper investigates the effect of strategic leadership (transformational and transactional leadership) on innovation ambidexterity capability (innovation exploration and innovation exploitation) and effect of this capability on competitive advantages (price advantage, service differentiation advantage and customer concentration advantage) of manufacturing firms in Arak. 
The results show transactional leadership has an impact on innovation exploration, both transactional and transformational leadership has an impact on innovation exploitation. Both innovation exploitation and exploration have an impact on service differentiation advantage but innovation exploitation has an impact on price and customer concentration advantage.